VALUATION HIGHLIGHTS
- Services constitute 52% of the Trefis price estimate for NetApp's stock.
- Product constitutes 41% of the Trefis price estimate for NetApp's stock.
WHAT HAS CHANGED?
- Latest Earnings - Q1 FY'26
NetApp delivered a stable start to fiscal 2026, with Q1 revenue rising 1% year over year to $1.56 billion, supported by continued momentum in all-flash and cloud services. All-flash array sales grew 6% to $893 million, driving an annualized run-rate of $3.6 billion, while public cloud services revenue surged 33%, highlighting progress in NetApp’s hybrid-cloud strategy. Non-GAAP EPS came in at $1.55, broadly flat from a year earlier, though free cash flow hit a record $620 million—nearly 40% of revenue—underscoring the firm’s strong cash generation.
Note: NetApp's FY'25 ended on April 25, 2025. Q1 FY'26 refers to the quarter that ended on July 25, 2025.
- Guidance
For fiscal 2026, management guided revenue between $6.63 billion and $6.88 billion, implying about 3% growth at the midpoint, with non-GAAP gross margin of 71%–72% and operating margin of 28.8%–29.8%. The company expects EPS of $7.60–$7.90 and a 20%–21% tax rate.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are key drivers of NetApp's value that present opportunities for upside or downside to the current Trefis price estimate of NetApp:
Storage Infrastructure
- Products Revenue: We currently forecast NetApp's Products revenue to grow at a CAGR of 3% through the end of the Trefis forecast period. However, there could be a 25% upside to the Trefis price estimate if NetApp's product revenue can grow at 9% instead, led by higher demand for next-generation storage solutions.
- Netapp's Gross Margin: We currently forecast that the company's gross margin will see modest growth to around 73% in the coming years. There could be a 15% upside to the Trefis price estimate if the gross margins improved to 76% by the end of our forecast period.
For additional details, select a driver above or select a division from the interactive Trefis split for NetApp at the top of the page.
BUSINESS SUMMARY
NetApp, Inc. is a global cloud-led, data-centric software company that provides organizations the ability to manage and share their data across on-premises, private and public clouds. They provide a full range of enterprise-class software, systems, and services solutions that customers use to modernize their infrastructures, build next-generation data centers, and harness the power of hybrid clouds.
SOURCES OF VALUE
NetApp Gaining Share in Storage Infrastructure Market
Over the years, NetApp has witnessed an increase in its share of the storage infrastructure solutions market. Demand for NetApp's all-flash and hybrid systems, which are a combination of hardware and software, has risen strongly over the past couple of years. In addition, NetApp provides hardware and software support to its clients and customer education and training services, essentially covering an exhaustive group of cloud services.
KEY TRENDS
Demand for Cloud Storage Surging
The trend over the past few years has been away from hardware portable storage devices to cloud storage, and this has benefited NetApp. This trend is expected to continue as more and more enterprises switch to the cloud, pushing demand for NetApp's cloud solutions infrastructure products even higher.
Transition To Flash
There has been a sharp decline in NAND pricing over the last few quarters, and several companies are transitioning to flash-based storage devices. NetApp is benefiting from the trend with an increasing mix of flash-based storage device sales.
